Water UK

Water meters – the implications

24/10/08

Draft Water Resource Management Plans, which have recently been subject to public consultation, show that all companies expect to increase levels of metering over the coming years. For water companies in parts of the country which the Environment Agency has classed as ‘water stressed’, penetration is expected to reach at least 80% for most companies by 2020 and 90% by 2030.

This is line with the Vision set out by Defra in its Future Water strategy earlier this year. Faster progress towards metering has been helped by the Government Direction, also introduced this year, to allow companies in water stressed areas to introduce large-scale metering programmes where they can make an economic case for doing so. This is a far more sensible approach than previous arrangements, where companies were largely able to meter only in a very limited set of circumstances, including on customer request or on change of house ownership. Such a piecemeal approach significantly increases the cost of metering and limits its effectiveness as a tool of water conservation.

The simpler approach now favoured enables more of the benefits of metering to be realised. The main benefits are that:

 • Paying by quantity consumed is generally regarded as the fairest way to pay
 • Provides a stronger signal to users to manage water consumption and reduce wastage
 • Many customers can save money
 • Metering allows the possibility to design and introduce more complex tariff structures
 • Smart metering offers additional potential benefits, including the monitoring of variations in demand at different times of the day and year
 • Helps to detect leakage on customer properties.

These need to be balanced with any disadvantages that metering may bring, including:

 • Uncertainty over the extent to which meters do actually reduce consumption. The evidence for optional metering in particular is inconclusive and metered customers may be less likely to reduce consumption during times of drought for example.
 • Potential impacts on affordability, since less well-off customers may limit their use to save money with a consequent risk to health or hygiene. There is therefore a tension between pricing to encourage customers to use water wisely and making water affordable for all.
 • The capital and operational costs associated with installing and maintaining metered systems (these costs tend to be higher for smart metering systems).
 • The difficulty of individually metering some properties, such as those with a shared supply.
 • The historic cross subsidy, where the costs of metering have been shared amongst non-metered customers, is gradually unwound, leaving a smaller proportion of remaining unmetered customers paying a higher cost.

For these reasons, the pace of metering will continue to vary across the country. Water UK supports a company-specific approach to meters. It simply doesn’t make sense to force metering onto an unwilling public where the benefits are not justified. Metering has costs that must be assessed against benefits if policy is to be sustainable.

Before wide scale metering programmes can be rolled out there needs to be in place hardship arrangements or ‘safety-nets’ for those customers whose bill would rise sharply with the change in charging. We’re thinking here, for example the lower income larger family living in a low rateable value property. Such help already exists through the WaterSure scheme for those with 3 or more children under 19 at home or those using large quantities of water because they have a medical condition, but in both cases they must be receiving specific benefits to be eligible. A much wider range of customers will need protection from bill hikes in a changeover to metering.

A number of water companies are now focusing on this issue and including in their Draft Business Plans phased programmes, so that customers in poorer neighbourhoods are metered later. In addition several companies have introduced social tariffs or are planning to introduce them in their regions to mitigate the bill impacts of metering.

Good communication on the use of water and opportunities for water efficiency is also key. A meter buried in the ground, inaccessible to customers and read once a year doesn’t give them any information to understand or manage their water use. Many companies are now moving towards improved meter visibility (including internal meter displays where feasible and appropriate) and clearer information on usage included in bills. Smart meters will also play a role. But even ‘smart billing’ with information provided quarterly along with comparisons with normal family use would help.

All of this will need to take account of the ongoing Walker Review on Charging and Metering. This will

 • Examine the current system of charging households for water and sewerage services, and assess the effectiveness and fairness of current and alternative methods of charging;
 • Consider social, economic and environmental concerns; and
 • Make recommendations on any actions that should be taken to ensure that England and Wales has a sustainable and fair system of charging in place. This could include changes to current legislation and guidance.

The water industry will be working with the Review team and to ensure that national policy is sustainable and flexible enough to allow for real differences in circumstances across the country. The environment and customers would both benefit from such a policy.

Bruce Horton
Environmental Policy Adviser

Note: A version of this article appeared in Utility Week magazine, 24 October 2008.